Major works bill deduction

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Major works bill deduction

    Hello!

    I'm doing my first self assessment this year. I first let my property in May 2017, having paid a big bill for major external works late in 2014. These works were officially completed in May 2017, confirmed by the administration company, and are meant to be done every 7 years.

    Based on this, am I allow to deduct to total bill of for the works during this tax year 2016-17 since the works were completed during the lease period? Should I instead deduct the proportional yearly amount since the amount should cover a 7 year period?

    What about deducing buy to let mortgage product fee and/or exit fee of the previous mortgage to get that buy to let? Since they are cost I had to incur to let the property, can they be deducted?

    Many thanks!

    #2
    I would have thought the claim for the service charge should have been against 2014/15.

    Comment


      #3
      If your business income is under £15k, I believe you don't need to apportion over a number of years, and can just put it down in the year of the invoice date.
      To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

      Comment


        #4
        Originally posted by JK0 View Post
        If your business income is under £15k, I believe you don't need to apportion over a number of years, and can just put it down in the year of the invoice date.
        Could you give some keywords for further research on this. I'm not a property investor, myself, but rentals in my block are around £1,200 - £1.300 pcm, so on the border of £15k p.a., and I'm pretty sure some landlords have portfolios. This seems to imply the need for a level of detail on the service charges that isn't currently reliably being provided, but I haven't heard any rumours of sub-landlords complaining because they cannot complete their tax returns. I imagine they are just allowing the billed service charge against tax. (I would have thought tax problems would have got them interested.)

        Comment


          #5
          It's the cash basis versus accruals basis. I did read recently that they were going to put the threshold up to £85k.
          To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

          Comment


            #6
            I'm doing my first self assessment this year. I first let my property in May 2017, having paid a big bill for major external works late in 2014. These works were officially completed in May 2017, confirmed by the administration company, and are meant to be done every 7 years.
            If your business began this year, you are going to struggle with any costs being backdated.

            Costs can be backdated, but the business has to exist.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Originally posted by JK0 View Post
              It's the cash basis versus accruals basis. I did read recently that they were going to put the threshold up to £85k.
              How do you reconcile the payer only bringing the money into account when the money is spent on works with ICAEW TECH 03/11, which clearly shows the money as income, to the trust, when the money is due for payment, not when the work is done? Surely the same money should either be included on the accoutns for both sides, or excluded for both sides?

              Also, it is my understanding that conveyancers will pro-rata the actual service charge money for the current year, but will not treat the value of any sinking fund as being returnable to the seller. Of course, the sinking fund should have an impact on the capital value, but that is simply reflected in the asking price, so would normally appears as part of a capital, rather than a revenue, item..

              Note my practical experience on the latter point is about 30 years old, and I bought very close to the end of the financial year, so the seller essentially got to pay the full yearly contribution. However there was definitely no adjustment for the sinking fund..

              If expenditure only qualifies for tax when the resulting work is done, what happens if you sell when the sinking fund has been building up for five or more years?

              As I say, I'm not a property investor, so this doesn't directly affect me, but my lessor has never issued the annual statements that would make the position clearer, and has become erratic with account summaries, but, whilst they have other complaints, I've never heard of the leaseholders who are investors screaming for this information to complete their tax returns.

              To the OP: I've assumed this is a residential property, but you don't actually say.

              Comment


                #8
                Originally posted by leaseholder64 View Post

                How do you reconcile the payer only bringing the money into account when the money is spent on works with ICAEW TECH 03/11
                No idea, I'm afraid. I leave it to my accountant.

                To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

                Comment


                  #9
                  If your first let started in May 2017, you can only claim service charge payment apportioned from May 2017 onwards. You cannot claim cost of service charge paid in 2014 for building external decoration before the commencement date of your letting business .

                  But you should consult a tax accountant on how to prepare your 2017-2018 tax return.next year.

                  Comment

                  Latest Activity

                  Collapse

                  • SDLT relief for multiple dwellings
                    by BIGGYBIBIG
                    Hello everyone,
                    I have had an offer accepted on a property purchase, subject to a surveyors report of £395,000 in England.


                    I am currently looking at surveyors but i just wanted to know where i stand in terms of stamp duty, costs etc.

                    I have phoned 5 different solicitors
                    ...
                    10-08-2022, 19:20 PM
                  • Reply to SDLT relief for multiple dwellings
                    by BIGGYBIBIG
                    Thank you, so am i right in saying Because I already own a property it would be 3% which is the higher rate band?
                    As the
                    SDLT relief for multiple dwellings would still apply but at the higher rate bracket?...
                    10-08-2022, 23:25 PM
                  • Reply to SDLT relief for multiple dwellings
                    by DoricPixie
                    As you already own a residential dwelling which is presumably worth over £40,000 the higher rate of SDLT will apply to your multiple dwelling SDLT calculation.

                    https://www.gov.uk/hmrc-internal-man...ual/sdltm09766
                    10-08-2022, 22:50 PM
                  • Reply to SDLT relief for multiple dwellings
                    by BIGGYBIBIG
                    I don`t make the rules my friend,,, i could easily have bought a block of flats the other day,,, tenanted by most of them for over 5 years 10 years 12 years etc,,, all long term but the state of the place i would not let my dog live like that,,, if it were all about money that would have been a great...
                    10-08-2022, 19:44 PM
                  • Reply to SDLT relief for multiple dwellings
                    by AndrewDod
                    I don't know the answer, but if true this would be an absolute outrage.

                    Some little kid buying their own home where granny left them a quarter of a house that is rented out pays 3% additional tax

                    Someone who buys 8 properties pays 1%

                    Pity us all
                    10-08-2022, 19:32 PM
                  • Passing it on
                    by royw
                    I'm about to make a will and would like to check my assumptions are correct. Beneficiaries are OH (we're married) and DD. Some BTLs are in my sole ownership, others are joint tenants with OH. There is a large CGT liability on all of them if I were to sell. DD is an adult but IMO a bit too young for...
                    10-08-2022, 14:16 PM
                  • Reply to Passing it on
                    by SouthernDave
                    DD!!? This isn’t mums net you know...
                    10-08-2022, 19:07 PM
                  • Reply to Passing it on
                    by jpkeates
                    The IHT threshold would be £650k.
                    The other £350k applies for the disposal of the main residence only.

                    Just been dealing with exactly all this.
                    10-08-2022, 17:44 PM
                  • Reply to Passing it on
                    by Neelix
                    Not sure I agree with this.

                    As a married person on the first death the estate can pass to the surviving partner meaning the IHT threshold on their death will be £1 million, then on their death ........
                    10-08-2022, 17:32 PM
                  • Reply to Passing it on
                    by AndrewDod
                    1 - yes you can and will pay duplicate tax (assuming both types are due)
                    2- Yes
                    3- Yes
                    4-regard as effectively two items -- 50% with base value as per your probate value (need a formal assessment), other 50% with initial purchase value (whether by you or spouse. For the first half...
                    10-08-2022, 16:38 PM
                  Working...
                  X